Reasons Not to Purchase Whole Life Insurance
[social_share]Whole life insurance policies are the backbone of the life insurance industry, and not without good reason. They typically provide coverage for the longest period of time and allow the policy holder to earn money when their policy has expired. There are some factors, however, that each potential policy holder should consider when exploring their insurance options. Below is a list of reasons why not to purchase whole life insurance.
Higher premiums overall.
Whole life insurance policies tend to have higher overall premiums than offers which might be available elsewhere with other types of life insurance products. While some whole life insurance plans may allow the policy holder to adjust their coverage and premium amounts in the later stages of their policy, many are structured to require roughly the same premium throughout. This can result in the whole life policy holder paying more in monthly premiums than their term life counterparts. Paying more each month might not be in the best interest of the policy holder if they are concerned with freeing up their cash flow and being able to effectively budget each month’s needs.
Lower interest rates on cash value.
If a policy holder would like to purchase a whole life insurance plan in order to claim a cash payout upon the policy’s expiration, they should be advised that the interest rates on a whole life insurance policy’s cash value are often the lowest in the industry. A better alternative may be to seek out a cheaper form of life insurance while investing the difference in stocks, which carry a significantly higher rate of return on investment when successful.
Unnecessary coverage.
Many policy holders take out a whole life insurance plan before they reach middle age with the intent of providing for their loved ones in the event that they should pass away. Sometimes, however, a policy holder no longer has dependants as they reach the conclusion of their whole life insurance policy. If the policy holder has added to their savings each year or experienced success on other investments, they may no longer need the coverage provided by their whole life insurance plan. This means that they are throwing away money by paying a constant premium on unnecessary coverage each month. By thinking ahead and employing a different life insurance policy that allows for diminished coverage, policy holders are able to maintain some level of basic coverage without paying extra to get it.
